Nov. 9 (Bloomberg) -- Indian stocks had their biggest drop
this month as earnings reports from companies including State
Bank of India, the largest lender, and Tata Steel Ltd., the
biggest producer of the alloy, disappointed investors.

The BSE India Sensitive Index, or Sensex, fell 0.9 percent
to 18,683.68 at the close in Mumbai, the most since Oct. 30. It
lost 0.4 percent this week. State Bank slumped 3.9 percent as a
rise in bad loans outweighed better-than-estimated earnings.
Tata Steel sank 3.3 percent after unexpectedly reporting a loss
and Oil & Natural Gas Corp. tumbled to a five-month low after
profit declined the most in almost four years.

Earnings for 12, or 40 percent, of the 30 companies that
constitute the Sensex trailed analysts’ estimates for the
quarter ended September, same as for the June quarter, data
compiled by Bloomberg show.

“It has been a disappointing day as far as earnings go,”
Sunil Pachisia, vice-president at brokerage Pratibhuti Viniyog
Ltd. in Mumbai, said by phone. “Investors will now shift focus
to industrial output and inflation data due next week.”

The Sensex’s 30-day volatility was at 10.98, near the
year’s lowest reading of 10.04 set on Sept. 11, data compiled by
Bloomberg show. The S&P CNX Nifty Index slid 0.9 percent to
5,686.25, while its November futures settled at 5,720.60. India
VIX, which gauges the cost of protection against losses in the
Nifty, added 1.1 percent to 14.37.

India’s government will release industrial-output data for
the month of September on Nov. 12 while inflation data for
October is due Nov. 14.

Foreign Flows

Overseas funds were buyers of local equities for a seventh
straight day on Nov. 8, purchasing a net $56.5 million worth of
shares, data from the market regulator show.

The Sensex has rallied 21 percent this year, driven by
foreign inflows and the government’s policy reforms announced
since mid-September to revive economic growth. Foreigners have
bought a net $18.6 billion of Indian shares this year, the most
among 10 Asian markets tracked by Bloomberg, excluding China.

Prime Minister Manmohan Singh started the biggest policy
overhaul in a decade on Sept. 13, which included fuel-subsidy
curbs and a push to spur foreign investment in some industries.
India’s gross domestic product will increase 5.8 percent in the
year through March, the Reserve Bank of India said in a
statement on Oct. 30. That would be the slowest pace since 2003
and less than an earlier forecast 6.5 percent.

The Sensex trades at 14.9 times estimated earnings,
compared with a multiple of 11.3 times for the MSCI Emerging
Markets Index, data compiled by Bloomberg show.

Bad Loans

State Bank sank 3.9 percent to 2,155.05 rupees, snapping a
three-day rally. Profit jumped 30 percent from a year earlier to
36.6 billion rupees, exceeding the 35.2-billion rupee median of
38 analysts’ estimates compiled by Bloomberg. Bad loans rose to
5.15 percent of total advances from 4.19 percent a year ago, the
lender said in an exchange filing today.

“The bad-loan issue continues to be a matter of concern”
for Indian banks, S. Naganath, chief investment officer at DSP
BlackRock Investment Managers Pvt., said in an interview
broadcast on Bloomberg TV India today. “Our weightage to
private banks is a little higher than to state-run banks but as
a whole we continue to remain optimistic because once India’s
economic growth picks up, the bad loan issues will fade into the
background.”

Soured loans at Indian banks widened to 3.25 percent as of
June 30, from 2.94 percent in March, the Reserve Bank of India
said in an Oct. 29 report. ICICI Bank Ltd., the second-largest
lender, lost 1.6 percent to 1,059.20 rupees.

Tata, ONGC

Tata Steel slumped 3.3 percent to 390.55 rupees, its lowest
close since Sept. 13. Net loss, including that of Tata Steel
Europe Ltd., was 3.64 billion rupees in the second quarter,
compared with a profit of 2.12 billion rupees last year, the
company said in a statement today. The median estimate of 24
analysts in a Bloomberg survey was a 2.27-billion rupee profit.

Jindal Steel & Power Ltd., the second-biggest steelmaker by
value, erased a gain of as much as 1.4 percent and ended 0.2
percent lower at 383.2 rupees after second-quarter profit of
8.97 billion rupees fell short of analysts’ estimates.

Net income for Coal India Ltd., the world’s largest miner
of the fuel, climbed 19 percent from a year ago to 30.8 billion
rupees. That missed the 32.4-billion rupee median of 24 analyst
estimates compiled by Bloomberg. Shares of the company, the last
of the Sensex members to report results, fell 0.7 percent to
346.6 rupees. Earnings were announced after markets closed.